LOW · Q4 2025 Earnings
CautiousLowe's
Reported February 25, 2026
30-second summary
Q4 revenue jumped 10.9% YoY to $20.58B on comps of +1.3% — clearing the flat-to-+0.5% implied range with help from a 50bps Fern/Gianna storm benefit and the first full quarter of FBM consolidation. Management opened FY2026 with revenue guidance of $92.0–94.0B (+7–9% YoY) and adjusted EPS of $12.25–12.75 (midpoint +1.8% vs FY2025's $12.28), but the adjusted operating margin guide of 11.6–11.8% prints ~46bps of compression off the FY2025 12.16% exit — confirming the FBM+ADG drag is landing as flagged. The defensive tell: a 600-role corporate workforce reduction announced into a Q4 beat, paired with a "down 1% to up 1%" market forecast and Q1 already guided below the FY comp midpoint on February storm activity.
Headline numbers
EPS
Q4 FY2025
$1.98
Revenue
Q4 FY2025
$20.58B
+10.9% YoY
Gross margin
Q4 FY2025
32.5%
Operating margin
Q4 FY2025
8.3%
Key financials
Q4 FY2025| Metric | Q4 FY2025 | YoY | Q3 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $20.58B | +10.9% | $20.81B | -1.1% |
| EPS | $1.98 | — | $3.06 | -35.3% |
| Gross margin | 32.5% | — | 34.2% | -173bps |
| Operating margin | 8.3% | — | 11.9% | -362bps |
Guidance
Guidance is issued for both next quarter and the full year. Both may appear below.
Actuals vs prior guidance
| Metric | Period | Prior guide | Actual | Δ | Result |
|---|---|---|---|---|---|
| Revenue | Q4 FY2025 | $86.0 billion | $86.286 billion | +$0.3 billion above guide | Beat |
| Adjusted diluted EPS | FY2025 | $12.25 | $12.27 | +$0.02 above guide | Beat |
| Comparable sales | FY2025 | flat | +1.3% | +1.3 points above guide | Beat |
| Adjusted operating margin | FY2025 | 12.1% | 12.16% | +0.06 points above guide | Beat |
New guidance
| Metric | Period | Guide | YoY |
|---|---|---|---|
| Revenue | FY2026 | $92.0 to $94.0 billion | +7% to +9% YoY |
| Diluted EPS (GAAP) | FY2026 | $11.75 to $12.25 | — |
| Adjusted diluted EPS | FY2026 | $12.25 to $12.75 | — |
| Comparable sales | FY2026 | flat to up 2% | — |
| Operating margin | FY2026 | 11.2% to 11.4% | — |
| Adjusted operating margin | FY2026 | 11.6% to 11.8% | — |
| Net interest expense | FY2026 | approximately $1.6 billion | — |
| Effective income tax rate | FY2026 | approximately 24.5% | — |
Platform metrics
Q4 FY2025| Segment | Q4 FY2025 |
|---|---|
| Store Count | 1,759 stores |
| Retail Selling Space | 196 million sq ft |
| Weekly Customer Transactions | 16 million |
| Q4 Comparable Sales Growth | 1.3% |
| Pro Sales Growth | Growth driven (specific % not disclosed) |
| Online Sales Growth | Growth driven (specific % not disclosed) |
| Home Services Sales Growth | Growth driven (specific % not disclosed) |
Profitability
Q4 FY2025| Segment | Q4 FY2025 |
|---|---|
| Operating Margin | 8.30% |
Management tone
Q1'25 defensive macro repositioning → Q2'25 transformational M&A pivot → Q3'25 macro capitulation → Q4'25 cost-out and lowered structural bar.
The arc that started with "expectations for our core business remain unchanged" in Q2 and bent to "the timing of an inflection remains unclear" in Q3 closes this quarter with an explicit cost action and a market forecast of down 1% to up 1%. Three quarters ago the FY guide range carried a +1% top end that implied modest back-half recovery; this quarter that recovery thesis is gone from the market call itself. "Our outlook for 2026 remains cautious given the persistent volatility in the housing macro" — said on the back of a Q4 comp beat. Beating the bar while lowering it is the cleanest possible signal that management has no internal visibility on the unlock and is preparing the P&L for a longer hold.
The 600-role workforce reduction is the substantive tone shift. Through three prior quarters Lowe's cost discipline was framed as efficiency reinvested into customer-facing initiatives; this quarter it's "This workforce reduction will help us create greater financial agility within our dynamic industry." "Financial agility" is preparation language, not growth language. It signals management expects the volatile environment to persist long enough that fixed cost flexibility becomes more valuable than scaled capacity — a different posture than the M&A-funded forward-positioning thesis of Q2.
Two quarters ago AI was being positioned as deployed infrastructure; last quarter it was generating quantified revenue claims (Milo doubling online conversion); this quarter it's framed as the productivity engine that funds margin defense. "$1 billion incremental productivity for 2026" with double-digit productivity gains in the tech team using AI tools moves the AI narrative from revenue lever to cost lever — a meaningful re-categorization that aligns with the defensive posture.
The FBM+ADG narrative held but the financial framing tightened uncomfortably. Q3 disclosed ~50bps annualized op margin dilution with ~30bps incremental wrap into FY2026. This quarter that wrap is fully visible in the 11.6–11.8% adjusted op margin guide. Per Q&A: "FBM ADG: 30 basis points dilution, 50 basis points annualized on RAP." The acquisitions are landing as flagged — no positive surprise on synergy capture, no negative surprise on dilution magnitude. The pro-extended-aisle commentary remains qualitative ("multi-year build-out through 2026"), and pro comp remains undisclosed for a fourth consecutive quarter.
The interest expense step-up to ~$1.6B (from the ~$1.4B FY2025 guide) is the single cleanest read on how the FBM financing flows through the FY2026 EPS bridge. Combined with the ~46bps adjusted op margin compression, the +1.8% adjusted EPS growth at the midpoint despite +8% revenue growth is mathematically the story of this guide — operating margin and interest expense together consuming nearly all of the inorganic revenue benefit at the EPS line.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Peter Benedict · Baird
Status and opportunity of pro extended aisle rollout; incremental margins post-acquisition integration as sales recover
Pro extended aisle exceeding expectations with multi-year build-out through 2026, adding suppliers and markets weekly. New products include vinyl siding, building materials, doors, flooring, electrical wiring. For margins: FBM ADG creating 30 bps dilution (50 bps annualized on RAP), $1B productivity expected in 2026, modest cost pressures embedded, continued investment in sales initiatives for value-conscious consumers.
Chris Horvath · J.P. Morgan
Demand trajectory and weather normalization analysis; post-storm recovery potential for lawn and landscape given severe winter
Q4 had 100 bps hurricane headwind partially offset by 50 bps from Fern/Gianna (200 bps in January); underlying demand trends strong across pro, DIY, DIFM. February disruption expected from storms but managing spring as first-half event. Category strength in millwork, lumber, building materials, electrical, paint, garden, hardware, flooring, kitchens/bath. Optimistic on spring recovery given best-in-stock and garden strategy in company tenure, but cautiously optimistic due to tariff uncertainty, high rates, and weak DIY demand.
Kate McShane · Goldman Sachs
Sales driving initiatives for cautious consumers in 2026 (price/promotion strategy); transaction vs ticket cadence outlook
No major strategy change on price or promotion; will manage price on portfolio basis in volatile tariff environment. Focus on tier-one promotional events (spring, Labor Day, Memorial Day, Fourth of July). Emphasis on customer value and cost-conscious offerings both in-store and online. Continuing pro extended aisle investment, transform home services offerings, total home strategy. Expect growth weighted toward ticket in H1 2026 as tariff price increases lap, then transaction trends to improve H2 2026 moving to neutral.
Michael Lasser · UBS
Why wider guidance range than historical; leading KPIs that would signal upside/downside; strategic framework for AI impact on home improvement sector
2% guidance spread reflects uncertain macro; company expects to outperform macro and take share. Key KPI is big-ticket discretionary purchases—sustained increase signals healthier, more confident consumer. Macro scenarios: low end assumes elasticity pressure, deteriorating sentiment, continued big-ticket deferral; high end assumes big-ticket uptick, tax refund benefits, HELOC activity, pro momentum. AI framework: improve how sell, shop, work. Examples include Milo Companion virtual assistant (1M questions/month), 200 bps service improvement in adopting stores, doubled online conversion, pro companion tool, merchant productivity tools showing double-digit gains. Embracing AI as net positive.
Jonathan Manduszewski · Jefferies
Geographic performance variance analysis (weather-adjusted); Lowe's Media Network P&L contribution and gross margin tailwind in 2026
No material geographic differences in performance when weather stripped out; housing dynamics vary across country but financial performance consistent. Media Network: hired new leader, improved technology platform, leveraging customer insights from pro and DIY loyalty programs, expanding channels (creator networks, sports marketing, connected TV, online video), providing suppliers measurable results. Advertising revenue growth reflected in $1B productivity expectation for 2026 (roughly split evenly between gross margin and expense benefits).
Answers to last quarter's watch list
What to watch into next quarter
Q1 comp delivery against "below midpoint of FY guide" framing — FY guide is flat to +2%; midpoint is +1%. Below-midpoint implies sub-+1% with storm-impacted February. Anything negative resurrects the FY-comp-cut risk after only one quarter.
Adjusted operating margin compression cadence — Q1 guided ~20bps below the bottom of the FY range (i.e. ~11.4%). Watch whether Q1 actual prints in line; meaningful undershoot signals the 11.6–11.8% FY range itself is at risk and the $1B PPI productivity number is back-end loaded.
First quantified pro comp or FBM cross-sell metric — Four consecutive quarters of qualitative-only pro disclosure with FBM now consolidating is unusual. The first hard pro number — or the first FBM cross-sell metric — would convert the multi-year build-out narrative into a model input.
Tariff/pricing flow-through to gross margin in H1 — Management guided H1 2026 growth weighted toward ticket as tariff price increases lap, with transaction trends improving toward neutral in H2. Watch whether Q1 gross margin holds the FY2025 33.48% level or compresses, which would signal elasticity is biting harder than the H1 ticket strategy implies.
Workforce reduction execution and total restructuring charge — 600 corporate roles announced without a specific severance/restructuring charge disclosed. Watch the Q1 GAAP-to-adjusted bridge for the full cost; a larger-than-expected charge would expand the adjusted-vs-GAAP optical gap further.
De-lever progress against 2.75x by mid-2027 — Adjusted debt/EBITDA exited Q4 at 3.31x with ~$1.6B FY2026 interest expense. Watch the Q1 leverage print and any debt-paydown commentary; slippage signals capital return flexibility (especially buyback pace) tightens.
Sources
- Lowe's Q4 FY2025 Press Release / 8-K exhibit, filed February 2026 — https://www.sec.gov/Archives/edgar/data/60667/000006066726000020/exhibit991-01302026.htm
- Lowe's Q4 FY2025 earnings conference call transcript (management commentary and Q&A)
- Lowe's Q3 FY2025 Press Release / 8-K exhibit (prior guidance baseline)
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